Visa announced that it had reached an agreement to acquire financial data aggregator Plaid for $5.3 billion. Plaid’s investors include Visa, MasterCard and American Express, among others. Unlike most card-linked data providers who source consumer financial data through secure APIs from banks and payment networks, Plaid relies on a consumer entering their online banking user name and password into a fin-tech app. The Plaid platform then fetched the data through the consumers’ online banking portal. Several large banks including Capital One and Chase had recently announced they were going to block Plaid’s preferred method of data retrieval.
The move by large banks to block Plaid’s data access hastened its decision to sell to Visa. It is also an admission by Plaid that accessing a consumers’ financial data through “screen scraping” an online banking portal is not a sustainable or secure model. The Plaid acquisition is still a significant win for Visa. Visa’s acquisition effectively guarantees access to certain high growth fin-tech customers like Venmo, while simultaneously granting Visa access to competitor payment network data through online banking portals -at least for a limited time. However, many of Visa’s competitors and many large banks may likely to terminate their participation/collaboration with Plaid after the acquisition. So in some ways this was a defensive move for Visa, preventing other payment networks from accessing this valuable data platform.